Page 53 - The UnCaptive Agent

26 THE UNCAPTIVE AGENT

promise of driving reduced frequency of claims going
forward. At the end of the day, claims costs drive
premium rates.
Also, the rise of the autonomous (or self-driving) car
is reaching the point at which it will become increasingly
adopted in the next several years. The most optimistic
people in the insurance business believe it will be twenty
years before self-driving cars replace human-driven
cars completely. That’s not the point. The point is that
beginning in 2022 or 2023, augmented-driving cars,
and ultimately, self-driving cars will begin to replace
humans as the drivers on America’s roadways. That will
inevitably result in lower physical damage and liability
premiums, and thus lower commissions for personal
insurance agencies.
As the direct writing companies have lost market
share in personal insurance, they have sought to reduce
their costs of doing business by cutting agent commis-
sions. This has led to many of their agents considering
movement to the independent agency (IA) channel. And
while there are many advantages for the agency owner
in the IA channel, if you are one of those considering
making that change, you should think very carefully
about whether you will be able to build long-term suc-
cess solely on personal insurance. Traditionally, the
independent agent has had a huge advantage in com-
mercial insurance compared to the captive channel.
While most small IA agencies derive the majority of
their revenues from personal lines, many of them also
sell commercial insurance. As time passes, the chan-
nel will become increasingly reliant on commercial
lines insurance for much of its income. So, even if your
expertise is in personal insurance, it would be wise for
you think about developing an additional plan to sell
commercial insurance.